Yen appreciates against US dollar

5 May 2023 , 08:52 AM

On Friday, Japanese Yen appreciated against the dollar in early trade. The yen was trading up by 0.2% against the dollar, at 134.02/ $, and is on track to post a weekly appreciation of nearly 1.5%.

The European Central Bank (ECB) on Thursday reduced the pace of its interest rate rises with a 25-basis-point raise.

Market expectations for how far rates will climb were reduced even as ECB President Christine Lagarde hinted at additional tightening to come.

Investors are on edge as a crisis affecting regional banks across the United States gets worse, and pressure is mounting on American authorities to do more to support the industry.

The Los Angeles-based bank’s proposal to investigate strategic options caused investor concerns to rise, which caused shares of PacWest Bancorp to fall on Thursday, bringing down other regional lenders with it.

Another indication of the industry’s stress came on Thursday when Canada’s Toronto-Dominion Bank Group cancelled its $13.4 billion acquisition of First Horizon Corp.

Since then, traders have factored in more aggressive rate reduction from the Fed, with Fed funds futures suggesting a slight possibility that cuts may occur as early as June and all the way up to the end of the year.

As a result, the dollar index fell to 101.23 on Friday, a general decline in the value of the dollar.

To $1.2595, sterling increased by 0.16%.

April’s nonfarm payrolls report is due later on Friday, the next major data point that will offer further clues on the Fed’s fight against inflation.

The U.S. services sector continued to grow steadily in April, according to data released earlier this week, indicating that inflation is still sticky as U.S. private firms increased hiring in April.

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